Q2 results were impressive and validated the sweet spot theme enjoyed by most of the companies we cover: higher prices + lower costs = higher margins. Pricing accounted for 80% of the gross profit increase yoy. Operating leverage did the rest for the bottom line, with annualized RoE in Q2 at 58%!
The question is: are current margins sustainable? Kri-Kri believes they are. They raised 2023 EBIT guidance to E33m from E24m, implying E7m in H2 vs E26m in H1. Seasonality explains the decline with management adding price discounts, uncertainty, and extra costs. Still, E7m of EBIT is remarkable considering H2 is usually loss-making.

What’s new? After reviewing Q2/H1 results and several consumption data/indicators, we are skeptical about private spending capacity at current price levels. We find consumers have adjusted their purchases lower in volume terms. The post-Covid savings glut is exhausted, and fiscal support will be lower in 2024.
Conclusion. It seems corporates will have to choose between fewer sales or lower margins going forward. YTD volume spending data from super/hyper markets and shopping malls; electricity, fuels, and water consumption; demand for loans; retail trade… underline a common theme: volume growth is deteriorating.

H1 results did not bring anything new to the investment case. Water consumption moved further down, the non-invoiced part went up and EYDAP is still struggling to generate enough revenues to cover its (mainly) fixed cost base. EBIT was slightly negative (E0.3m). Not a reason to celebrate but adjusting for provisions, EBIT turns positive to E2.0m (from E1.1m in H1 2022). At least costs seem to have stabilized.

H1 results were weak on a lower load factor (-440bps yoy) and flat operating capacity; sales/EBITDA/net went down by -7%/-10%/-25% yoy. The good news is the load factor is up in Q3. And the Kafireas 330MW mega-wind project is completed. We see delays in other RES projects, which is quite common for TEN and the sector. Speculation over M&A has abated causing the share price to lose its (E5-E6/sh) M&A premium. Management insists the interest is alive.

Jumbo published H1 numbers showing sales up 20% yoy (already known); EBITDA +27% yoy and net income +36% yoy. Citing several factors, namely Q3-to-date trading, the deadly floods in Thessaly, and the heavyweight Xmas season ahead, management lowered its sales guidance to +12% yoy (from +15%) but raised net income guidance to +15% yoy (from +10%), thanks to the gross margin dropping less than -200bps yoy under previous guidance.